Merger Audit

This is prescribed especially for the
underperforming company distressed with debt
burden and is caught up with heavy accumulated
losses.

Companies capital has been eroded due to losses,
due to which actual capital has lowered as
compared to actual paid up capital, company
needs to undertake reduction of capital. This will
enable the company to bring paid up capital near
to actual capital employed.

The reduction of share capital shall be in any
way, and in particular in the following manner or
in combination of below mentioned:

Extinguishing liability on shares which have
remained unpaid after calls.

Consolidating shares by reducing face value
of shares to the extent paid up.

Cancellation of paid up share capital either
with or without reduction of liability on
shares (whether fully paid or not) to match
paid up capital with capital employed, and
subsequently consolidating these partly
paid-up shares into fully paid up share.

Purchasing of own shares from investors by
The Company amounts to buyback. This
process is regulated by several governing
laws like Companies Act and SEBI, this offer
can be binding or optional to the investors.

Buyback becomes necessary when there
are surplus but idle funds or unattractive
alternative investment options with it, then
company may choose to reduce its share by purchasing for cancellation form its
shareholders.

Few peeks flowing from above strategic move are

Higher EPS and value creation to the
shareholders

Helps exit to the selected/ small group
of Shareholders

Help increase promoter holding in the
company

Thwart takeover bid

This management decision triggers the
signal of bright prospects about the
company among the investors.

It's a compromise agreement entered into
between shareholders (all or any class of them)
with The Company on application to the High
Court, by either of them. In this case the Court
shall direct the proceeding in manner it considers
justified, in consultation with either parties.

When company's substantial capital has been
eroded by losses or paid up capital is excess of
actual capital employed, company needs to
undertake Arrangement with Shareholders.

It's a compromise agreement entered into
between creditors and The Company on
application to the High Court, by either of them.
In this case the Court shall direct the proceeding
in manner it considers justified, in consultation
with either parties.

This arrangement is effective when company is
over burdened with debt and debt servicing is
causing operational instability and substantial
capital has been eroded by losses, due to which
actual capital employed is getting diluted
compared to paid up capital. Arrangement with
Creditors to will help restructure this debt.

This facilitate optimum credit utilization and
servicing and eases day to day smooth
operation of business

As solution to hassles involved, HU consultancy
provides planning and execution of strategy in
lights of allied laws and taxation matters, with
backing of highly experienced team of CAs, CSs
and solicitors, we will be acting as project
manager on behalf of you taking entire
responsibility from end to end, assisting you in all
the intricacies involved in carrying out
successfully Arrangement with Creditors &
Shareholders.